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BIIB

US09062X1037

"Non-GAAP net income attributable to Biogen Inc."

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Biogen Inc. (NASDAQ: BIIB) today reported third quarter 2015 results,
including revenues of $2.8 billion, an 11% increase compared to the
third quarter of 2014. Non-GAAP diluted earnings per share (EPS) for the
third quarter of 2015 were $4.48, an increase of 18% over the third
quarter of 2014. Non-GAAP net income attributable to Biogen for the
third quarter of 2015 was $1.0 billion, an increase of 16% over the
third quarter of 2014.

On a reported basis, GAAP diluted EPS for the third quarter of 2015 were
$4.15, an increase of 15% over the third quarter of 2014. GAAP net
income attributable to Biogen for the third quarter of 2015 was $966
million, an increase of 13% versus the same period in the prior year. (A
reconciliation of GAAP to Non-GAAP quarterly financial results can be
found in Table 3 at the end of this release).

Biogen also announced a corporate restructuring, which includes the
termination of a number of pipeline programs and an 11% reduction in
workforce. These changes are expected to reduce the current annual run
rate of operating expenses by approximately $250 million. The Company
plans to reinvest these savings to support key commercial initiatives,
including increased sales and marketing activities behind TECFIDERA, and
the advancement of high potential pipeline candidates in areas such as
Alzheimer’s disease, multiple sclerosis, and spinal muscular atrophy.

“We remaincommitted to maximizing the potential of our
commercial portfolio, with a particular emphasis on TECFIDERA®,”
said Chief Executive Officer George A. Scangos, Ph.D. “We continue to
see growth for our market leading portfolio of MS products, driven by
the uptake of our oral therapy TECFIDERA in recently launched countries
worldwide and the introduction of PLEGRIDY® to new markets.”

“The decision to reduce the Company’s workforce was extremely difficult,
but we believe these actions are necessary to fulfill our mission of
bringing important new medicines to patients. We have several
high-quality programs that are now or soon will be in Phase 3, and the
cost savings from the restructuring will be reinvested to carry out
those programs aggressively and hopefully to bring them to patients as
quickly as possible,” Dr. Scangos continued.“We are grateful for
the contributions of our talented and admired colleagues and we will do
our best to treat everyone with fairness and dignity.”

Corporate Restructuring

The Company plans to substantially complete the majority of the 11%
reduction of its global workforce by the end of 2015. The Company is in
the process of notifying employees affected by the restructuring, and
has initiated the required consultation processes in European countries
where employees may be impacted. Biogen has also discontinued several
programs, including its Phase 3 program for TECFIDERA in secondary
progressive MS, the development of anti-TWEAK in lupus nephritis, and
certain activities in immunology and fibrosis research.

Implementing these changes is expected to reduce the current annual run
rate of operating expenses by approximately $250 million. Biogen expects
to incur a charge of approximately $85-$95 million, primarily in the
fourth quarter of 2015.

Additionally, the Company plans to identify additional savings in
non-labor expenses by the end of the year.

The restructuring is expected to yield savings for 2016 and beyond and
provides additional financial flexibility to support marketed therapies
and focus on a number of meaningful pipeline opportunities, including:

Commercial initiatives aimed at increasing sales of TECFIDERA
including new direct to consumer marketing programs;

Aducanumab in Phase 3 for Alzheimer’s disease;

BAN2401 in Phase 2 for Alzheimer’s disease;

E2609 in Phase 2 for Alzheimer’s disease;

SMN-Rx in Phase 3 for spinal muscular atrophy;

Anti-LINGO in Phase 2 for multiple sclerosis;

Subject to deal closure, MT-1303, a Phase 3 ready asset for
inflammatory bowel disease with potential further development in MS;
and

Total multiple sclerosis product sales were $2.2 billion compared to
$2.1 billion in the same quarter last year.

TECFIDERA revenues were $937 million compared to $787 million in the
same quarter last year. These results consisted of $754 million in
U.S. sales and $183 million in sales outside the U.S. compared to $638
million and $149 million, respectively, in the third quarter of 2014.

TECFIDERA revenues in the third quarter of 2015 increased 6%
versus the second quarter of 2015. In the U.S., TECFIDERA revenues
increased 5% versus the second quarter of 2015, partially due to
an increase of inventory in the specialty pharmacy channel.

Interferon revenues, including AVONEX® and PLEGRIDY, were
$785 million compared to $745 million in the same quarter last year.
These results consisted of $538 million in U.S. sales and $247 million
in sales outside the U.S. compared to $482 million and $263 million,
respectively, in the third quarter of 2014.

Interferon revenues in the third quarter of 2015 increased 14%
versus the second quarter of 2015. In the U.S., interferon
revenues increased 18% versus the second quarter of 2015,
primarily due to a rebalancing of wholesaler inventory from the
drawdown in the second quarter of 2015, which contributed
approximately $40 million to the increase.

TYSABRI® revenues were $480 million compared to $501
million in the same quarter last year. These results consisted of $284
million in U.S. sales and $196 million in sales outside the U.S.
compared to $275 million and $226 million, respectively, in the third
quarter of 2014.

Net revenues relating to RITUXAN® and GAZYVA®
from our unconsolidated joint business arrangement were $337 million
compared to $291 million in the same quarter last year.

ELOCTATE® revenues were $91 million and ALPROLIX®
revenues were $66 million.

Revenues for FAMPYRA® and FUMADERM™ were $34 million
compared to $37 million in the same quarter last year.

Royalty revenues were $9 million compared to $67 million in the same
quarter last year.

Corporate partner revenues were $40 million compared to $36 million in
the same quarter last year.

Foreign exchange, offset by hedging, weakened total revenues by
approximately $63 million compared to the third quarter of 2014.

Non-GAAP SG&A expense was $478 million compared to $569 million in the
same quarter last year. GAAP SG&A expense was $478 million compared to
$570 million in the same quarter last year.

Non-GAAP R&D expense was $520 million compared to $416 million in the
same quarter last year. GAAP R&D expense was $520 million compared to
$417 million in the same quarter last year.

Capital Allocation Highlights

As of September 30, 2015, Biogen purchased approximately 9.7 million
shares of its common stock for a cost of approximately $3 billion in
the open market under the Company’s previously authorized $5.0 billion
share repurchase program. Since the end of the quarter, the Company
has purchased an additional 3.2 million shares for approximately $900
million.

At the end of the third quarter of 2015, the Company’s weighted
average diluted shares were 233 million.

In September 2015, Biogen issued senior unsecured notes in the
aggregate principal amount of $6 billion.

Through the end of the third quarter of 2015, Biogen had cash, cash
equivalents and marketable securities totaling approximately $7.8
billion.

2015 Financial Guidance

In light of the restructuring, change in capital structure, and
significant share repurchases, Biogen announced an update to its full
year 2015 financial guidance. This guidance consists of the following
components:

Revenue growth is expected to be approximately 8% to 9% compared to
2014, a modest increase versus prior guidance. This guidance implies a
sequential decrease in revenue in the fourth quarter of 2015 based on
the assumption of stable US wholesaler inventory levels for the
balance of the year in MS and a reduction in US wholesaler inventory
for Rituxan.

R&D expense is expected to be approximately 19% to 20% of total
revenue, unchanged from prior guidance.

SG&A expense is expected to be approximately 19% to 20% of total
revenue, a decrease from prior guidance.

Non-GAAP diluted EPS is expected to be between $16.20 and $16.50, an
increase from prior guidance.

GAAP diluted EPS is expected to be between $14.65 and $14.95, an
increase from prior guidance.

Biogen may incur charges, realize gains or experience other events in
2015 that could cause actual results to vary from this guidance.

Business Development and Collaboration
Highlights

In July 2015, Biogen and the Parkinson’s Institute and Clinical Center
announced the formation of a strategic alliance focused on enhancing
the understanding of the underlying biology of Parkinson’s disease
(PD).

In August 2015, Biogen, the ALS Association and Columbia University
Medical Center announced a new collaboration to better understand the
differences and commonalities in the ALS (Amyotrophic Lateral
Sclerosis) disease process and how genes influence the clinical
features of the disease.

In September 2015, Biogen announced an agreement with Mitsubishi
Tanabe Pharma to exclusively license MT-1303, a Phase 3 ready
experimental medicine with potential in multiple autoimmune
indications, including inflammatory bowel disease and potentially
multiple sclerosis. MT-1303 is a potentially best-in-class oral
compound that targets the sphingosine 1-phosphate (S1P) receptor. This
transaction is subject to customary closing conditions, including the
expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the United
States, and is expected to close in the fourth quarter of 2015.

Neurology Highlights

In September 2015, Biogen announced that the first patient has been
enrolled in the Phase 3 studies, ENGAGE and EMERGE, for its
investigational treatment aducanumab for early Alzheimer’s disease.

In October 2015, Biogen presented new clinical data for its portfolio
of MS therapies at the 31st meeting of the European Committee for
Treatment and Research in Multiple Sclerosis (ECTRIMS) in Barcelona,
Spain. Presentations included results providing evidence for the
strong and sustained efficacy of TECFIDERA in relapsing-remitting
multiple sclerosis (RRMS) patients who were newly diagnosed or who
were early in the course of disease, disability and cognitive outcomes
data for ZINBRYTATM versus intramuscular interferon
beta-1a, and additional Phase 2 results for anti-LINGO-1 in acute
optic neuritis.

In October 2015, Biogen announced the top-line results from the Phase
3 ASCEND study evaluating natalizumab (TYSABRI) in secondary
progressive multiple sclerosis. The study did not achieve its primary
and secondary endpoints. Detailed results from the ASCEND study will
be presented at a future medical meeting.

During the quarter, Roche announced positive results from two Phase 3
studies evaluating ocrelizumab compared with interferon beta-1a in
RRMS as well as a Phase 3 study evaluating ocrelizumab versus placebo
in primary progressive MS (PPMS). If approved for commercial sale by
the FDA, Biogen will receive tiered royalties ranging between 13.5-24%
of US net sales.

Biogen has ceased development of anti-TWEAK in lupus nephritis after a
Phase 2 futility analysis. Biogen will provide more information on the
anti-TWEAK program in future scientific presentations.

Hemophilia Highlights

In August 2015, Biogen presented interim results from the Phase 3
B-YOND open label extension study of ALPROLIX in hemophilia B at 67th
Annual Meeting for the National Hemophilia Foundation. These interim
data showed that participants in the study maintained low bleeding
rates with one to two week prophylaxis regimens. Safety results were
typical of the hemophilia B populations studied.

In August 2015, interim results from the ASPIRE extension study of
ELOCTATE in hemophilia A were published in Haemophilia. These
data demonstrated that people on extended-interval prophylaxis
regimens with ELOCTATE experienced low bleeding rates. Safety results
were consistent with the general hemophilia A population.

In September 2015, Biogen and Swedish Orphan Biovitrum AB (Sobi)
announced a positive recommendation from the European Medicines
Agency’s Committee for Medicinal Products for Human Use (CHMP) for the
marketing authorization of ELOCTA™ (rFVIIIFc). If approved, Sobi would
lead commercialization in Europe.

In October 2015, Biogen, Sobi, and the World Federation of Hemophilia
(WFH) announced that the first shipments of much-needed hemophilia
therapy have started to arrive at treatment centers across the
developing world. This initiative is the first phase of Biogen and
Sobi’s ten-year commitment to produce up to 1 billion International
Units (IUs) of hemophilia therapy for humanitarian use.

Other Highlights

In September 2015, Biogen announced that it was named the
biotechnology industry leader on the Dow Jones Sustainability World
Index for the second year in a row. The company was also named to the
Dow Jones Sustainability Index North America for the sixth consecutive
year, one of only three biotech companies included.

In October, Biogen announced that Tony Kingsley, executive vice
president, Global Commercial Operations, will leave the company and a
search has been initiated for a permanent replacement. In the interim,
his responsibilities will be assumed by John G. Cox, executive vice
president, Pharmaceutical Operations & Technology.

Conference Call and Webcast

The Company's earnings conference call for the third quarter will be
broadcast via the internet at 8:30 a.m. EDT on October 21, 2015, and
will be accessible through the Investors section of Biogen’s homepage, www.biogen.com.
Supplemental information in the form of a slide presentation will also
be accessible at the same location on the internet at the time of the
conference call and will be subsequently available on the website for at
least one month.

About Biogen

Through cutting-edge science and medicine, Biogen discovers, develops
and delivers to patients worldwide innovative therapies for the
treatment of neurodegenerative diseases, hematologic conditions and
autoimmune disorders. Founded in 1978, Biogen is one of the world’s
oldest independent biotechnology companies and patients worldwide
benefit from its leading multiple sclerosis and innovative hemophilia
therapies. For product labeling, press releases and additional
information about the Company, please visit www.biogen.com.

Safe Harbor

This press release contains forward-looking statements, including
statements relating to: commercial product and pipeline potential and
progress; anticipated benefits, cost savings, and charges related to our
corporate restructuring initiatives; anticipated benefits and potential
of investments, collaborations and business development activities; and
updated 2015 guidance and other financial matters. These forward-looking
statements may be accompanied by such words as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,”
“potential,” “project,” “target,” “will” and other words and terms of
similar meaning. You should not place undue reliance on these statements.

These statements involve risks and uncertainties that could cause actual
results to differ materially from those reflected in such statements,
including: our dependence on sales from our principal products; failure
to compete effectively due to significant product competition in the
markets for our products; failure to protect and enforce our data,
intellectual property and other proprietary rights and the risks and
uncertainties relating to intellectual property claims; uncertainty of
long-term success in developing, licensing or acquiring other product
candidates or additional indications for existing products; risks
associated with clinical trials, including our ability to adequately
manage clinical activities, unexpected concerns that may arise from
additional data or analysis obtained during clinical trials, regulatory
authorities may require additional information or further studies or may
fail to approve or may delay approval of our drug candidates; the risk
that positive results in a clinical trial may not be replicated in
subsequent or confirmatory trials or success in early stage clinical
trials may not be predictive of results in later stage or large scale
clinical trials or trials in other potential indications; the occurrence
of adverse safety events, restrictions on use with our products or
product liability claims; difficulties in obtaining adequate coverage or
changes in pricing or the availability of reimbursement for our
products; our dependence on collaborators and other third parties for
the development and commercialization of products and other aspects of
our business, which are outside of our control; problems with our
manufacturing processes; failure to manage our growth and execute our
growth initiatives; failure to achieve the anticipated benefits and
savings from our corporate restructuring efforts; failure to comply with
legal and regulatory requirements; risks relating to technology failures
or breaches; risks related to indebtedness; the risks of doing business
internationally, including currency exchange rate fluctuations; charges
and other costs relating to our properties; fluctuations in our
effective tax rate; risks relating to investment in and expansion of
manufacturing capacity for future clinical and commercial requirements;
the market, interest and credit risks associated with our portfolio of
marketable securities; risks relating to our ability to repurchase
stock, including at favorable prices; risks relating to access to
capital and credit markets; environmental risks; risks relating to the
sale and distribution by third parties of counterfeit versions of our
products; risks relating to the use of social media for our business;
change in control provisions in certain of our collaboration agreements;
and the other risks and uncertainties that are described in the Risk
Factors section of our most recent annual or quarterly report and in
other reports we have filed with the SEC.

These statements are based on our current beliefs and expectations and
speak only as of the date of this press release. We do not undertake any
obligation to publicly update any forward-looking statements.

TABLE 1

BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Revenues:

Product, net

$

2,391,717

$

2,117,366

$

6,762,605

$

5,916,423

Unconsolidated joint business

337,181

290,678

1,005,302

890,859

Royalty

8,989

67,148

37,386

145,348

Corporate partner

39,972

36,254

119,171

110,019

Total revenues

2,777,859

2,511,446

7,924,464

7,062,649

Cost and expenses:

Cost of sales, excluding amortization of acquired intangible assets

310,028

302,639

908,579

873,771

Research and development

519,863

417,174

1,471,140

1,393,331

Selling, general and administrative

477,827

570,436

1,530,083

1,658,732

Amortization of acquired intangible assets

98,065

122,431

285,972

382,515

(Gain) loss on fair value remeasurement of contingent consideration

244

(49,433

)

5,887

(46,213

)

Total cost and expenses

1,406,027

1,363,247

4,201,661

4,262,136

Gain on sale of rights

-

4,379

-

12,138

Income from operations

1,371,832

1,152,578

3,722,803

2,812,651

Other income (expense), net

(15,413

)

(16,290

)

(41,288

)

(17,030

)

Income before income tax expense and equity in loss of investee, net
of tax

1,356,419

1,136,288

3,681,515

2,795,621

Income tax expense

330,093

274,774

904,475

721,709

Equity in loss of investee, net of tax

6,833

5,394

12,548

14,932

Net income

1,019,493

856,120

2,764,492

2,058,980

Net income (loss) attributable to noncontrolling interests, net of
tax

53,871

(738

)

49,053

7,660

Net income attributable to Biogen Inc.

$

965,622

$

856,858

$

2,715,439

$

2,051,320

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$

4.16

$

3.63

$

11.60

$

8.67

Diluted earnings per share attributable to Biogen Inc.

$

4.15

$

3.62

$

11.57

$

8.64

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

232,191

236,217

234,134

236,641

Diluted earnings per share attributable to Biogen Inc.

232,612

236,972

234,659

237,449

TABLE 2

BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

As of

As of

September 30, 2015

December 31, 2014

ASSETS

Cash, cash equivalents and marketable securities

$

5,842,502

$

1,845,384

Accounts receivable, net

1,327,780

1,292,445

Inventory

918,921

804,022

Other current assets

1,181,670

730,303

Total current assets

9,270,873

4,672,154

Marketable securities

1,947,354

1,470,652

Property, plant and equipment, net

2,027,821

1,765,683

Intangible assets, net

4,181,245

4,028,507

Goodwill

2,408,854

1,760,249

Investments and other assets

892,221

617,536

TOTAL ASSETS

$

20,728,368

$

14,314,781

LIABILITIES AND EQUITY

Current portion of notes payable and other financing arrangements

$

5,171

$

3,136

Other current liabilities

2,628,797

2,216,570

Notes payable and other financing arrangements

6,529,275

580,283

Long-term deferred tax liability

136,761

50,656

Other long-term liabilities

861,421

650,096

Equity

10,566,943

10,814,040

TOTAL LIABILITIES AND EQUITY

$

20,728,368

$

14,314,781

TABLE 3

BIOGEN INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION:

NET INCOME ATTRIBUTABLE TO BIOGEN INC. AND DILUTED EARNINGS PER SHARE

(unaudited, in millions, except per share amounts)

An itemized reconciliation between diluted earnings per share on a
GAAP basis and on a non-GAAP basis is as follows:

An itemized reconciliation between net income attributable to Biogen
Inc. on a GAAP basis and on a non-GAAP basis is as follows:

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2015

2014

2015

2014

GAAP net income attributable to Biogen Inc.

$

965.6

$

856.9

$

2,715.4

$

2,051.3

Adjustments:

Amortization of acquired intangible assets

94.0

118.7

273.3

371.5

(Gain) loss on fair value remeasurement of contingent consideration

0.2

(49.4

)

5.9

(46.2

)

SG&A: Stock option expense

-

1.4

-

5.4

R&D: Stock option expense

-

1.2

-

4.8

Donation to Biogen Foundation

-

-

-

35.0

Income tax effect related to reconciling items

(17.7

)

(29.2

)

(57.4

)

(106.2

)

Non-GAAP net income attributable to Biogen Inc.

$

1,042.2

$

899.6

$

2,937.2

$

2,315.6

2015 Full Year Guidance: GAAP to Non-GAAP Reconciliation

An itemized reconciliation between projected net income attributable
to Biogen Inc. and diluted earnings per share on a GAAP basis and on
a non-GAAP basis is as follows:

$

Shares

Diluted EPS

Projected GAAP net income attributable to Biogen Inc.

$

3,422.0

231.2

$

14.80

Adjustments:

Amortization of acquired intangible assets

364.0

2015 Restructuring initiatives

85.0

(Gain) loss on fair value remeasurement of contingent consideration

9.0

Income tax effect related to reconciling items

(100.0

)

Projected Non-GAAP net income attributable to Biogen Inc.

$

3,780.0

231.2

$

16.35

Numbers may not foot due to rounding.

Use of Non-GAAP Financial Measures

We supplement our consolidated financial statements presented on a GAAP
basis by providing additional measures which may be considered
“non-GAAP” financial measures under applicable SEC rules. We believe
that the disclosure of these non-GAAP financial measures provides
additional insight into the ongoing economics of our business and
reflects how we manage our business internally, set operational goals
and forms the basis of our management incentive programs. These non-GAAP
financial measures are not in accordance with generally accepted
accounting principles in the United States and should not be viewed in
isolation or as a substitute for reported, or GAAP, net income
attributable to Biogen Inc. and diluted earnings per share.

Our “Non-GAAP net income attributable to Biogen Inc.” and “Non-GAAP
earnings per share - Diluted” financial measures exclude the following
items from "GAAP net income attributable to Biogen Inc." and "GAAP
earnings per share - Diluted":

1. Purchase accounting and merger-related
adjustments.

We exclude certain purchase accounting related items associated with the
acquisition of businesses, assets and amounts in relation to the
consolidation of variable interest entities for which we are the primary
beneficiary. These adjustments include charges for in-process research
and development, the amortization of certain acquired intangible assets
and fair value remeasurement of our contingent consideration obligations.

2. Stock option expense recorded in accordance
with the accounting standard for share-based payments.

3. Other items.

We evaluate other items on an individual basis, and consider both the
quantitative and qualitative aspects of the item, including (i) its size
and nature, (ii) whether or not it relates to our ongoing business
operations, and (iii) whether or not we expect it to occur as part of
our normal business on a regular basis. We also include an adjustment to
reflect the related tax effect of all reconciling items within our
reconciliation of our GAAP to Non-GAAP net income attributable to Biogen
Inc.